Last month, New York Department of Financial Services announced that it will start regulating digital currencies.

Normally, people groan at the news of more regulation. However, digital currencies are on the fringe and seek legitimization. Being regulated is a clear sign of impact.

BitCoin enthusiasts mostly cheered on the news, even though for many, mainstream regulation and economy is something they oppose.

Wall Street is on the fence about this. The banks are given another product they can trade, but at the cost of possible loss of control in that market. Banks sit as members of the Federal Reserve Banks, making them part of the money supply. Digital currencies are decentralized and if there is a center of power for them, it would be Silicon Valley.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book Money Laundering: How criminals got paid and got away.

Two federal agents are charged with stealing digital currency during the Silk Road investigation. Two secret agents were from the DEA and the Secret Service. The charges are wire fraud and money laundering.

Ross Ulbricht

About Silk Road

Silk Road was an underground online marketplace where everything and anything could be sold in secrecy using Bitcoin and other digital currency. Silk Road was run by a user named Dread Pirate Roberts, the famous character from the movie The Princess Bride. Silk Road was shut down in October 2013. Dread Pirate Roberts is presumed to be Ross Ulbricht, who was charged for conspiracy to commit drug trafficking and money laundering. Ulbricht denies that he is Dread Pirate Roberts.

Opinion

Cryptocurrencies, especially Bitcoin, will play a big role in transactions. Bitcoin, only because it is the most accepted cryptocurrency. Cryptocurrencies because their value is material economically. Transactions using cryptocurrency on markets like Silk Road provide privacy that the non-cash economy we live in no longer does. The cost of transaction is very small. There is little chance of hyper inflation due to over-creation of the currency. There are some major downsides of Bitcoins for the user as well, but for governments and financial institutions, the main issue is the lack of transparency. It is not that governments want to get rid of privacy. It’s just that where there is privacy, crime is more likely to take place.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book History of Money Laundering: How criminals got paid and got away.